Pizza franchising is a tough market. The competition is stiff and the recent economic recession really put the squeeze on many franchise operators. But despite pizza price wars and price-sensitive consumers, operators like Glenn Ajmo have discovered a few silver linings that are helping him sustain growth.
"As an owner, it (the economy) has allowed me to secure leases at very favorable prices with landlord contributions towards construction," says Ajmo, who operates three Marco's Pizza locations in Florida and has just signed a lease on another site. Furthermore, he says the tough market has reduced employee turnover at his stores. "Our employees are appreciating the opportunity to work in a very tough job market."
But Ajmo shoots straight when discussing the far-reaching effects of the recent economic turmoil. One of the strategies he implements during hard times is to continue advertising. "The tougher things get, the more you need to stay in front of the consumer with a consistent message. The amount of discounting can change up or down, but keep the message consistent," he says. Even now amidst growing signs of recovery, Ajmo says he will increase advertising as his sales increase.
He also keeps a watchful eye on his employee costs. He outsources much of this to a professional employer organization (PEO). "The fee for their services is extremely fair, and we save on Unemployment Insurance, Worker's Comp, and EPLI coverage," he says. Additionally, the PEO provides free training to his employees covering issues such as hiring, firing, and sexual harassment. As for benefits, Ajmo only pays towards medical insurance for the GM of each store, which he says keeps his costs at a minimum.
Keeping his existing units operating at maximum efficiencies is one thing, expanding his empire is another. That takes capital and Ajmo has been fortunate enough so far to foot the bill on his own. "I personally don't need capital. I finance from internal means," he says. "But Marco's Franchising has outstanding financing programs in place and there are other conventional financing programs available to me if needed." To give himself one more advantage, he recently took on a partner to help him build his next 5 stores more quickly.
In addition to operating his own stores, Ajmo serves as an area representative for a 125-unit territory. So he's tried to help these franchisees secure necessary capital. "Capital seems to be opening up ever so slightly," he says. "Where it was doom and gloom before, there is a glimmer of hope now. One big difference is the days of the low down payment loans are gone."
Ajmo says his ultimate goal is to build 7 to 10 stores himself. He wants to build sales to a point of a 40 percent cash-on-cash yearly ROI, hold onto the stores until they have paid all initial investment back, and then sell them as a package. "I would then move on and build another 7 to 10 units," he says. "Since I am the area rep, this will help me in building out my territory."
Seven years into his franchising life, Ajmo seems to have a plan in place, a list of objectives in front of him, and a solid strategy for growth.